Costly diesel adds to economic doldrums

Trucks carry more than 70 percent of freight in the United States, and they run on diesel fuel. With diesel prices now at an all-time high, the increase is expected to ripple through a contracting economy already coping with widespread inflation and supply chain disruptions.

"The goods that we buy and purchase, they flow through the supply chain in trucks, on boats, in planes that are fueled by diesel," Tim Kraft, associate professor of operations and supply chain management at North Carolina State University, told ABC11 in Durham.

"So, when you see that diesel price goes up, the shipping cost goes up, which then translates to a higher cost of goods for the items that they're shipping, so those higher costs are pushed onto us the consumer, so we see higher prices that impact our wallet."

The trucking sector also consumes around 70 percent of all diesel fuel and is a barometer of the US economy, according to the American Trucking Associations. Diesel is also used in farming equipment.

The cost of diesel hit an average of $5.43 a gallon on Wednesday, up nearly $2 from a year ago, according to the American Automobile Association, and elevated by more than 4 percent from a week ago.

Major contributor

Trucks move roughly 72.5 percent of the nation's freight by weight, according to the ATA, and consumed 36.5 billion gallons of diesel fuel in 2019.

"While gasoline prices get much of the attention, diesel, which broadly is the fuel that moves the economy, has quietly surpassed its recent record high as distillate inventories, which include diesel and jet fuel, have plummeted to their lowest level in years," said Patrick De Haan, head of petroleum analysis at GasBuddy.

The recent pop in diesel prices has been attributed to the ongoing Russia-Ukraine conflict and falling inventories of oil and refined products such as diesel. And the trucks and trains that use that fuel will face higher costs amid a rebound in consumer demand.

The shortage is most prominent on the East Coast, where distillate inventories have fallen to their lowest since 1996, Bloomberg reported.

"In the past 15 years, the number of refineries on the US East Coast has halved to just seven," reported Bloomberg correspondent Javier Blas on Wednesday.

Inflation hit a 40-year high in March, with the Consumer Price Index up by 8.5 percent over 2021.Prices also jumped 1.2 percent from February to March.

Patrick Penfield, a supply chain studies expert at Syracuse University, told WGRZ-TV in Buffalo, New York: "Usually there's a correlation－every 10 percent that fuel prices go up, there's a 0.3 percent increase in inflation. So that's what consumers are going to see－you're going to keep seeing prices go up."

Smaller, independent trucking owner-operators are especially feeling the price pinch.

"A lot of them are dying because of the fact that fuel is killing them," Calvin Lazier, an independent truck driver and owner-operator from Orlando, Florida, told Fox News. "Independents are going to company drivers because they don't have to worry about fuel－they don't have to worry about mechanical or anything else."

Agencies contributed to this story.